Technology stocks lead a broad retreat
Technology companies helped drag U.S. stocks broadly lower Monday, pulling the indexes below the record highs they reached last week.
The Standard & Poor’s 500 index dropped 0.5%, shedding more than a third of its gain from last week. Tech stocks were the biggest weight on the market, but the losses were shared broadly by a mix of banks, energy companies and others that rely on direct consumer spending. Chipmaker Intel fell 1.7%, Capital One lost 0.9% and Valero Energy slid 2.3%. Only real estate stocks eked out a gain.
The pullback came as bond yields mostly moved higher after easing last week. Rising bond yields tend to make shares in technology companies that have had a strong run-up over the last year look too expensive.
The S&P 500 fell 22.21 points to 4,163.26. The benchmark index is coming off its fourth straight weekly gain. The Dow Jones industrial average lost 123.04 points, or 0.4%, to 34,077.63. Both the S&P 500 and Dow hit all-time highs Friday.
The tech-heavy Nasdaq composite slid 137.58 points, or 1%, to 13,914.77, while the Russell 2000 index of smaller firms fell more than the broader market, shedding 30.67 points, or 1.4%, to 2,232.
Stocks have rallied in recent weeks amid a string of encouraging reports on hiring, consumer confidence and spending that point to an accelerating U.S. economy. COVID-19 vaccinations and massive support from the U.S. government and Federal Reserve are fueling expectations for solid corporate profit growth as more businesses reopen after being forced to close or operate on a limited basis due to the pandemic.
A good amount of investor attention is focused on the bond market as government stimulus and the recovering economy have led to concerns about inflation. The yield on the 10-year Treasury note rose to 1.60% from 1.57% late Friday.
Even so, company earnings are the focus this week, as investors look to justify the recent rise in stock prices with profits needed to keep the market fueled in this recovery. On average, analysts are expecting profits across the S&P 500 to be up 24% from a year earlier, according to FactSet.
Coca-Cola added 0.6% on Monday after beating Wall Street’s first-quarter profit forecasts and giving investors an encouraging update on improving sales. Harley-Davidson jumped 9.7% after handily beating analysts’ profit forecasts.
Outside of earnings, several stocks made big moves Monday.
Tesla dropped 3.4% after two people were killed in Texas in a crash of one of its models. Authorities say there was no one in the driver’s seat at the time of the crash. It’s not clear whether the car’s driver-assist system was being used.
Peloton slid 7.3% after regulators issued a safety notice over the exercise equipment company’s new treadmill. The company hasn’t been forced to recall the treadmill, and it’s fighting the issue.
Altria Group slumped 6.2% after a published report that the Biden administration is considering requiring tobacco companies to reduce the nicotine level of cigarettes sold in the U.S.